This month the United States Supreme Court (“Supreme Court”) rejected the narrow review that courts have taken in the past regarding the exemptions from overtime compensation under the Fair Labor Standards Act (“FLSA”). In Encino Motorcars, LLC v. Navarro, 584 U.S.___(April 2018), the Supreme Court vacated the 9th Circuit Court of Appeals (“9th Circuit”) decision to reinstate the service advisors’ complaint for overtime under the FLSA. The Supreme Court rejected the 9th Circuit’s holding that the salesman exemption in Section 213(b)(10)(A) did not cover auto service advisors. The Supreme Court rejected the 9th Circuit’s reasons that the plain reading of the statute, the narrow construction of FLSA exemptions, and the legislative history of the FLSA supported its holding. The Supreme Court went into detail as to how the 9th Circuit misinterpreted the statutory context of the exemption and that the review of the language in the statute regarding the exemption should be read to be inclusive of “any combination of its nouns, gerunds, and objects.” Id., at 9.
The Supreme Court also stated that the 9th Circuit incorrectly viewed the FLSA exemptions narrowly. The Supreme Court stated that “because the FLSA gives no ‘textual indication’ that its exemptions should be construed narrowly, ‘there is no reason to give [them] anything other than a fair (rather than a ‘narrow’) interpretation’ Id., citing to A. Scalia & B. Garner, Reading Law 363 (2012). The Supreme Court further stated that the FLSA exemptions “are as much a part of the FLSA’s purpose as the overtime-pay requirement.” Id.
This case is important to all employers because the Supreme Court is changing its view that FLSA exemptions should be construed narrowly which will allow employers to seek a fair, not narrow, review of the exemption.